Recovery from serious neurological injury requires substantial rewiring of neural circuits. Precisely-timed electrical stimulation could be used to restore corrective feedback mechanisms and promote adaptive plasticity after neurological insult, such as spinal cord injury (SCI) or stroke. This study provides the first evidence that closed-loop vagus nerve stimulation (CLV) based on the synaptic eligibility trace leads to dramatic recovery from the most common forms of SCI. The addition of CLV to rehabilitation promoted substantially more recovery of forelimb function compared to rehabilitation alone following chronic unilateral or bilateral cervical SCI in a rat model. Triggering stimulation on the most successful movements is critical to maximize recovery. CLV enhances recovery by strengthening synaptic connectivity from remaining motor networks to the grasping muscles in the forelimb. The benefits of CLV persist long after the end of stimulation because connectivity in critical neural circuits has been restored.